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Bitcoin

The Greedy Leading the Blind

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It’s very exciting to see pictures of shops in Japan and India that are now accepting Bitcoin. If you have any, feel free to tag me on social media. I’m starting a collection. 🙂

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Here’s one of my favorite ones yet. This photo was taken by a Redditor in North Carolina.

Despite the American flag in the background and obviously American shops I still wanted to verify the authenticity of this, so here it is: https://www.crabtree-valley-mall.com/stores/bitcoin-dispensary

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With end users now able to conveniently and instantly convert their government issued paper for real verifiable digital money now in the United States of America, the tipping point could be sooner than we think.

At the moment, there is less than $40 Billion worth of value being stored on the bitcoin blockchain.

Mati Greenspan
eToro, Senior Market Analyst

 

Please note: All data, figures & graphs are valid as of June 2nd. All trading carries risk. Only risk capital you can afford to lose.

Market Overview

Though there are very few business leaders who agree with President Trump’s appalling decision last night, the stocks are rallying into fresh new all time record highs.

We know that Elon Musk and Bob Iger have quit the Trump Advisory Board, but that was to be expected. However, this time even the big bankers have turned against him. The CEOs of JP Morgan and Goldman Sachs have both come out strongly against the US’s withdrawal from the COP21 Paris Climate agreement.

Lloyd even used his first tweet ever to express his dismay in a language that Trump can understand…

It’s very strange to see the stock markets continue to move north. Perhaps with the polar ice caps about to melt they’re finding greener pastures. Of course, with the sea levels rising it makes sense that they’re searching for higher ground.

Here’s wall street reacting to Trump. All three major indices reached new record highs.

In a bizarre show of “the greedy leading the blind,” Asian stocks are also up today with the Nikkei hitting 20k for the first time since 2015. Even stranger is that China is the only one bucking the trend.

Strange because now that the USA is out, China is seen to be the leader of green energy innovation.

Countdown: 6 days

Theresa May seems to be taking the latest polls rather hard. The media continues to grill her about why she is not participating in any of the open debates and the Prime Minister is showing clear physical signs of fear.

Here, just watch this video…

http://www.mirror.co.uk/news/politics/you-cant-trust-polls-any-10541995

See what I mean??

There have been no major polls released in the last 12 hours so we eagerly await the next one. If Labour manages to gain any further ground or even take the lead in the polls we could see the Pound start to react.

So far the GBPUSD has been quite resilient to news about the election ever since it was announced on April 18th but you never know when that can change.

NFP Today

It seems like so much has happened over the past month. Today’s jobs announcement from the United States is expected to come out strong.

The labor market in the US is performing well as business confidence is picking up under Donald Trump. The official unemployment rate is just 4,4% at the moment. Analysts are expecting that a total of 180 to 185 Thousand jobs have been added in the month of May.

The final number will be published at 8:30 AM on Wall Street and should have a fair impact on the way the stocks end the week.

If the number comes out as expected the US Dollar’s reaction will likely be short lived, perhaps a few spikes on some of the major currency pairs.

At this point, the Fed are the ones driving the Dollar. Expectations are high that they will raise the interest rates on June 14th and today’s announcement will probably not cause any hesitation unless it comes out much much weaker than expected.

For now, the Fed fears only inflation, which is not acting according to their present models. The next inflation reading will actually be on the 14th, about 5 hours before the interest rate decision.

As always, feel free to contact me directly with any questions, comments, or feedback. Wishing you an amazing weekend!

This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.
Past performance is not an indication of future results. All trading carries risk. Only risk capital you’re prepared to lose.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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3 Comments

3 Comments

  1. Gabriel

    June 2, 2017 at 12:20 pm

    That rise of all major indexes after the announcement made by Trump is simply an insult to next generations.

    • embersburnbrightly

      June 2, 2017 at 3:35 pm

      Agreed. One would think that what is good for humankind would be good for business; but it sadly appears that what is good for business in the short term might be catastrophic for humankind (and other species) in the long term.

  2. Crytokings

    June 2, 2017 at 4:06 pm

    Traders with a conscience! The old school way of thinking will be their ruin. The Trumps of the world days are numbered!

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Bitcoin

Power Consumption for Bitcoin Mining Is Now Ranked 61st in the World

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Bitcoin Miners
Designed by Freepik

Bitcoin prices have been towering in the past couple of weeks. This is cause for celebration for users who have heavily invested in the cryptocurrency; but, it appears the value of bitcoin is not the only thing that has hit the roof in 2017. Bitcoin mining energy consumption has also reached new heights.

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A research study conducted by PowerCompare—a U.K.-based company for energy comparison tariff—found that the average power used to mine bitcoins this year has already gone beyond the annual energy consumption for some 159 countries. In particular, the global average power spent on bitcoin mining has far outstripped the energy consumption in Ireland and a couple of African countries.

This new study was based on data from Digiconomist, whose current estimation of power used to mine bitcoin hovers around 30.14 TWh annually. This figure is way above Ireland power consumption that currently stands at 25 TWh yearly.  In fact, recent research from Dutch Bank ING found out that one bitcoin transaction consumes sufficient electricity to power an average household for a whole month.

At this rate, if bitcoin miners were a single country, it would be positioned 61st in the world based on power consumption, comparable to Slovakia and Morocco. PowerCompare has already predicted that if the trend continues, bitcoin mining will expend the entire world’s electricity by February of 2020!

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Why bitcoin mining is increasing power consumption levels

What makes bitcoin mining an energy black hole?

Apparently, it is the computational requirements that process the complex cryptographic problems that miners must solve to be rewarded with the cryptocurrency. Just like other notable cryptos such as Ethereum and Litecoin, Bitcoin depends on miners to validate transactions performed in their respective blockchains.

To verify transactions, miners are required to solve complex mathematical problems, which on becomes increasingly difficult as more and more miners join the mining bandwagon. The more byzantine the cryptographic problems, the more the processing power that is needed to solve them.

In the case of bitcoin—the most popular cryptocurrency—a multitude of miners now make it absolutely necessary to use ASICs (Application-Specific Integrated Circuits) which consume considerable amounts of electricity. At present, ASICs have been designed to provide far more efficient computations, both in terms of the hash rate and power consumption when compared to CPU or GPU mining.

But the ASICs haven’t really resolved the hurdles of power consumption.

Ideally, the use of ASICs meant that the total time required to validate new blocks drastically reduces too. This hasn’t happened because of the way the bitcoin protocol was conceived. Apparently, the mining difficulty in bitcoin ensures that the total time taken for generation of new blocks must be kept constant.

As a matter of fact, the Bitcoin network automatically alters the difficulty level for bitcoin mining to ensure the discovery of new blocks every 10 minutes by miners based on two factors. First, there is the global block difficulty that forces valid blocks to have a hash value that is below the target to ensure the difficulty level is maintained.

Second, the number of miners that are actively participating in the mining process has been soaring, meaning the difficulty level has remained constant for a while now. Also, the mining difficulty automatically adjusts after every 2016 blocks on the Bitcoin network. Depending on how many users were actively mining – together with their combined hashpower—and the time it takes to find the 2016 blocks, the difficulty can either go up or down.

As the mining difficulty increases, miners should acquire more powerful hardware to accommodate for the adjustment which again increases the computational electricity. It is also worth noting that there is no maximum mining difficulty that has been set for the Bitcoin network. There is a possibility that the mining difficulty will continue to rise until all the Bitcoins are mined have been mined by the year 2140.

This means that power consumption in Bitcoin is not likely to decrease in the near future.

Challenges of mining Bitcoins

Here are some challenges of Bitcoin mining:

#1: Environmental hazards

The massive growth of cryptos has set up an exponential demand for processing power. The inordinate amounts of power required to mine bitcoins make it an environmental hazard since much of the earth’s electricity is still generated from greenhouse-gas-generating fossil fuels. This implies that bitcoin mining could be contributing to the climate changes and global warming.

#2: Stumbling block for mass adoption

The bitcoin cryptocurrency was conceived as a decentralized, peer-to-peer and trustless currency free from regulations of government agencies and financial institutions such as banks. Unfortunately, the adoption rate is discouraging. This can partly be attributed to the high energy consumption costs.

A recent study conducted by researchers from the HINUI (Hamilton Institute at the National University of Ireland) found that the cost of Bitcoin mining on the commodity hardware at present far exceeds the price of the rewards. In fact, Bitcoin mining has now been left to the big players who have the money to buy expensive ASICs with some of them leasing their hardware to small players in the so-called cloud mining.

#3: Rise of illegal piracy

In order to work around the hurdles of power-intensive requirements of bitcoin mining, some users have resorted to using dirty tricks to obtain the computational power from other people’s machines. A recent study published by Futurism found that Pirate Bay has covertly been testing a Javascript mining app on their website which allocates a huge volume of their visitors’ CPUs for purposes of mining the cryptocurrencies.

While the website in question was developed to help users in illicitly downloading files such as games, movies, and music, the JavaScript app hijacks the users’ CPUs to mine cryptocurrencies which is illegal.

Conclusion

The rise of bitcoin values is a cause for celebration in the crypto universe. It means that the entire global community is beginning to appreciate the value of cryptocurrencies in the world economy. However, mining energy consumption is soaring at an alarming rate. The quicker we find mechanisms to make bitcoin and other cryptocurrency mining electricity use “greener,” the better it would be for the Blockchain technology that is often heralded as the next internet.

Featured image courtesy of Shutterstock. 

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Bitcoin

Bitcoin Futures Officially Launch on CBOE

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The long-awaited bitcoin futures contract officially debuted on CBOE Global Markets Sunday, sending BTC/USD sharply higher. Trade volumes were reportedly thin as CBOE’s website crashed immediately after the contract went live.

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XBT Goes Live

CBOE’s futures contract, which trade under the symbol XBT, went live at 6:00 p.m. ET. Within minutes, bitcoin prices surged over $1,000, a sign that institutional money was pouring into the market. The BTC/USD exchange rate reached a session high of $15,811 before giving up gains later in the session. XBT traded at $16,000 soon after the contract went live, giving it a premium over the spot price.

At press time, BTC/USD was trading at $15,248, where it was little changed compared with the previous close.

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Bitcoin’s total market capitalization is $260 billion. Trade volumes over the past 24 hours have exceeded $13.5 billion, according to CoinMarketCap. South Korean trading desks drove much of the daily turnover, with Bithumb accounting for roughly 16.5% of transactions. That’s equivalent to roughly $2.2 billion.

The Bitfinex exchange turned over 12% of total bitcoin transactions, which is equivalent to $1.6 billion, data showed. Coinbase’s GDAX exchange saw 6% of the volumes, or roughly $823 million. GDAX experienced technical difficulty last week as bitcoin prices crossed $19,000.

Although trade volume on the exchanges was robust, liquidity in the futures market was relatively thin.

Highly Speculative Instrument

It has been argued that bitcoin futures represent one of the highest forms of speculation in recent memory, given that they are cash settled and have no delivery requirement. This point was raised by Randy Mitterling in Twitter of all places in response to Nassim Nicholas Taleb, the world renown essayist, scholar and former trader. Mitterling, who serves as a Chief Investment Adviser, said:

“Bitcoin futures are cash settled. No delivery requirement. It’s just a sentiment indicator that could be completely wrong compared to the actual price. Truly the most highest form of speculation ever created.”

Taleb, himself a brilliant writer and probability theorist, had provided a series of insightful tweets about bitcoin in general and the new futures contract in particular. In a Sunday post, Taleb said the following:

“Note that Bitcoin has a limited number of natural sellers. The entire concept is very concave supply (it costs more and more to extract). The number of producers shrinks with time.”

In an earlier tweet, Taleb also said:

“No, there is NO way to properly short the bitcoin “bubble”. Any strategy that doesn’t entail options is nonergodic (subjected to blowup). Just as one couldn’t rule out 5K, then 10K, one can’t rule out 100K.”

The arrival of bitcoin futures probably ups the ante on other forms of institutional investments involving cryptocurrency. Some analysts speculate that bitcoin exchange-traded funds (ETFs) are the next logical step for a market growing more comfortable with the idea of cryptocurrency.

CBOE chief Edward Tilly recently told CoinDesk that the case for a bitcoin-linked ETF is stronger now that futures trading is under way. As such, CBOE may be prepared to submit a new proposal to the Securities and Exchange Commission (SEC) to allow bitcoin ETFs and exchange-traded notes (ETNs) to be traded.

Tyler and Cameron Winklevoss failed to launch their bitcoin ETF earlier this year after the SEC rejected their proposal on grounds that the Bats exchange would be unable to enter necessary surveillance-sharing agreements.

A bitcoin ETF would allow investors to buy and sell the asset class much like a stock transaction. For many, it is seen as a precursor to greater mainstream adoption of the world’s no. 1 digital currency.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Bitcoin Plunges $2,000 on Eve of Futures Contract

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Bitcoin prices declined sharply over the weekend, as traders locked in profits before the highly anticipated XBT futures contract.

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BTC/USD Price Levels

The value of bitcoin pulled back sharply on Sunday, with prices hitting a low of $13,474. BTC/USD would later consolidate at $13,662 for a loss of $1,931, or 12.4%. The decline shaved tens of billions of dollars off bitcoin’s market cap. The coin was last valued at roughly $227 billion.

Despite the loss, trade volumes were still extraordinarily high on Sunday. Daily turnover in the bitcoin market crossed $14.7 billion. Interestingly, the Bitcoin Mercantile Exchange (BitMEX) saw the highest turnover Sunday at roughly 17% of the total transactions, which was equivalent to $2.5 billion South Korea’s Bithumb processed nearly 13% of all trades via BTC/KRW, which amounted to $1.9 billion. Bitfinex came in third at 9%, or $1.3 billion.

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Bitcoin put up massive gains this week, leading U.S. exchange Coinbase to crash temporarily. The exchange would later issue issue a gentle warning reminding account holders to “please invest responsibly.”

At its absolute peak, bitcoin clocked in above $19,500.

Broader Crypto Market Collapse

Bitcoin certainly wasn’t the only cryptocurrency in hot water on Sunday. In fact, the top 18 cryptos by market cap were in the red, according to CoinMarketCap. Only three of the top 66 coins were trading in positive territory.

Heavy losses were reported across the board, with the leading altcoins affected. Below is a rundown of some of the losses early Sunday:

Cryptocurrency Performance
Ethereum (ETH): -9%
Bitcoin Cash: -13%
IOTA (MIOTA) -18%
Litecoin (LTC) -12%
DASH (DASH) -10%
Monero (XMR) -16%
Bitcoin Gold (BTG) -18%
NEM (XEM) -30%
Stellar Lumens (XLM) -18%
EOS (EOS) -16%

As a result of the collapse, the combined value of cryptocurrencies fell to $376 billion Sunday. That represents a drop of $65 billion in just 24 hours. The total crypto market cap peaked north of $452 billion on Friday.

The declines followed another streak of record-setting gains for global cryptos that was largely driven by bitcoin. The world’s most expensive cryptocurrency has been riding high on news that CBOE will launch its bitcoin futures contract (XBT) a full eight days before rival CME Group.

XBT is a cash-settled futures contract based on the Winklevoss brothers’ Gemini auctions price. The contract will begin trading 6:00 p.m. ET Sunday on the CBOE Futures Exchange.

There’s no way to know for sure how Wall Street will treat the new derivatives contract. On Friday, the Futures Industry Association (FIA) issued a stern statement to the Commodity Futures Trading Commission (CFTC) that its members were concerned about the derivatives contract. In an open letter, the lobby group said XBT “did not allow for proper public transparency and input.”

Futures trading is said to be the domain of short-sellers, which could make bitcoin more volatile than before. That being said, the bitcoin community is excited about the prospect of a futures contract that enables them to bet on price swings without having to rely on cryptocurrency exchanges.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. 

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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